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What's Showrooming?

Car Dealers! Have you heard of the term, “Showrooming?” It’s basically a customer that comes into your dealership to look at vehicles while looking online on their smartphone at your competitor’s pricing. Annoying, right? So how do you combat these “show-roomers?”

One thing you can do is create a loyalty program. For loyalty programs to have the desired effect, you must consider these anti-showrooming strategies:

Your prices have to be in the same ballpark as those of your competitors.

Customers make every purchasing decision independently. You can't expect them to take long-term loyalty rewards into account as part of the buying decision unless those customers are explicitly prompted to do so.

Buying decisions often take place in a matter of seconds, which means that any anti-showrooming strategy needs to be executed in near real time to have any effect.

According to Marketingprofs.com there are five tactics that are worth exploring when showrooming is a problem:

Closing the price gap. When customers in a loyalty program receive discounts, the distance between the in-store price and the competitor's online price diminishes. Dealers must find a way to communicate the "effective price" (the current price minus the points-based discount) quickly and clearly: for example, "With your Valued Customer discount, the effective price of this [item] is $14,999!" Customers can't be expected to do the math themselves.

Bonus points. When showrooming is a problem with specific items, retailers can offer increased discounts or points on those items to further mitigate the price difference.

Free accessories. Dealers can offer free items that complement the purchase, such as a a bobble head for the car or some cool sunglasses to wear with the customer’s new ride. Often, such items have a perceived value that's significantly higher than their actual dollar value.

Bounceback offers. If a customer's behavior indicates the potential for a lost sale, dealers can transmit a bounceback offer, either with a discount or some other incentive. To be effective, however, the bounceback needs to happen in near real-time and it must relate very specifically to the customer's interests (Ex. free window tinting with vehicle purchase).

Pushed coupons. With today's technology, retailers can offer instant discounts and special cross-sell or up-sell opportunities; they can even reward customers simply for entering the store. The value of so-called push technology is that it gives customers a reason to make an in-store purchase. For example, ActivEngage, thanks to an integration with Hooklogic, offers ActivShow, which brings customers into your showroom by offering great incentives like a $25 prepaid MasterCard or $25 incentives to popular stores like Starbucks® or Target®.

What do you think of these tactics? Do you have any strategies in combating showrooming?

I've been following the effects of "showrooming" in relation to the retail environment for sometime now; as I participated in this practice myself. Lets agree that Amazon has been a driving force, offering their own "PriceCheck App".
I believe our industries definition for "Showrooming" takes on a slightly different meaning since the average customer will only go to another showroom/dealership to purchase rather going home to place their purchase online or ordering the product right from their mobile device.
With that being said we/dealers are faced with some of the same challenges with "Showrooming". I've witnessed many times a customer reaching for their mobile device or iPad to challenge the sales rep on pricing and value as they pull up like vehicles from other dealers during negations.
As Eric points out - Adapt or Die! Most sales reps cringe and crawl up in the corner when this happens. Sales professionals and managers NEED to be prepared on how to handle this challenge. Erin Touponse had written an article over on DealerRefresh titled "Smart Phones Will Be Their Weapon of Choice!" a little over a year ago after a conversation her and I had around the subject. It's a recommended read. I hope DS doesn't mind me including a link to the article - http://www.dealerrefresh.com/smart-phones-will-kills-car-dealers/
Ketty, you highlighted a few good ideas that dealers should be thinking about in relation to their retention and mobile strategy to help combat Showrooming. There are some technology challenges with mobile geo targeting but rest assure as these technologies will rapidly move forward. Think iPhone and the possibilities around their new soon to be released Passbook feature :) --> www.dealerrefresh.com/using-apple-passbook-at-car-dealership
You also mentioned your ActivShow powered by HookLogic and for those reading and are unaware, allow me to disclose that I work for HookLogic. You used the term "pushed coupon" where I much prefer targeted incentives because when taking this effective approach you only want to incentivize customers that are showing the behavior of being in the market for a vehicle - mobile or not. This keeps your Lead to Show and Show to Close on target for a great ROI.
How does this relate to mobile and showrooming? Ask yourself - what are you including in your mobile strategy to not only differentiate yourself form competitors but what are you doing drive/incentivize that potential high intent customer that's "showrooming" while at the dealership down the road to possibly leave and now consider your dealership as an option?
This is good stuff! This is using great technology and data to drive consumers into your dealership based on their behavior and intent to purchase a vehicle. This is a level that very few think about.
Eric - I do hope my links are permissible as they are very relevant to the conversation here.
Thanks!
Jeff

Hey Jeff,
Thanks for chiming in on the discussion - appreciate the added insight & the extra resources.
If dealers don't think that customers are price comparison shopping from their mobile devices while browsing the lot, then you need to brush up on understanding your consumer behavior.